Did you know that more than two million Australian households own a property other than the home they live in?1 Of these, almost 280,000 are available on short-term holiday rental sites such as Airbnb.2
That’s a lot of Aussies sharing their slice of paradise with guests in return for some additional income.
If you’re thinking about renting out your property to paying guests, there’s a lot to take into account – from council regulations and property management to tax considerations and the appropriate insurance for your holiday rental. Let’s go through some of the steps.
Step 1: Establish your purpose
Before jumping in, you might consider what it is that you want to achieve by listing your holiday home as a rental.
Are you seeking to maximise rental returns? Or are you more focused on covering some of the running costs while maintaining access for family and friends?
Keep in mind that holiday rentals often generate the most revenue during the times you may want to be enjoying the house yourself – such as Christmas, school holidays and over the January break.3 Are you prepared to sacrifice those special times to drive a good return?
Step 2: Do your homework
Putting your holiday home on the short-term rental market is a big commitment.
A browse of popular short-term rental platforms such as Airbnb and Stayz will show you what sort of holiday rentals are available in your area, and what rates they’re charging. This, in turn, will help you understand how your property lines up against others in the same area.
Step 3: Speak to your local council
Councils have a lot to say about holiday rentals – not all of it positive – and there are legal requirements and regulations you’ll need to be across.4 Yoav Tourel, Chair of the Australia & New Zealand Short Term Rental Association (ASTRA), notes that regulatory settings are often localised.
“Some councils charge higher rates for short-term rentals and others have no registration schemes at all,” Tourel says.
“Some areas have room night caps, others in the same location don’t.”
In Victoria’s Mornington Peninsula, the local council has made property owners responsible for their guests’ behaviour, with time limits in place for pools or spas. Off-street parking must also be provided for guests’ cars.5 Being aware of these sorts of requirements in your area will help you make an informed decision about the process.
If your holiday home is a townhouse or an apartment, you may also be subject to body corporate regulations, which could impact the viability of your holiday rental as a revenue earner. In New South Wales, for example, body corporates can limit short-term rental accommodation in their strata scheme by banning the property if it’s not the host’s principal place of residence.4
If you’re considering operating your holiday home as a bed and breakfast, it may impact your insurance – for instance, Youi doesn’t cover properties that are registered as bed and breakfast accommodation. There may also be additional regulations and required registrations, such as a Registration of Food Premises.6
Step 4: Consider the tax implications
Renting out your property in Australia comes with some tax considerations, but it also opens the door to potential tax deductions.
So, although you’ll need to declare the rental income in your tax return, you may be able to claim expenses for your rental property – but only for costs directly related to generating rental income.7
However, according to the Australian Taxation Office, you can’t claim deductions for expenses - or the proportion of expenses - that occur when you’re using the home yourself, or when it’s not genuinely available to rent. Some expenses that are fully deductible include:7
- Commissions for real estate agents
- Advertising costs
- Any phone calls made to a tradesperson regarding damage a tenant has caused
- The cost of rubbish removal, where rubbish has been left by tenants.7
The Australian Tax Office provides a wealth of information on its website for holiday home landlords, but there may be times when professional support is required.
Experienced holiday rental owner Carla Luce manages several holiday rentals including Casa Scenic, a Stayz Holiday Home of the Year in 2024.8 She advises any prospective holiday rental landlord to seek professional support.
“Getting legal and tax advice is important to ensure you have the correct cover and permits required,” Luce says.
Step 5: Think about choosing a rental platform or agent
So, how do you rent out your holiday home? Are you looking at renting out your property privately? Or perhaps you’d prefer to list it on a rental platform or with an agent.
Airbnb, Stayz and Booking.com are among the leading short-stay rental platforms globally. Each has an instant booking model – which provides the option for guests to book a property straight away without the need for prior approval – and operates by taking a percentage of the total cost of the booking.
Airbnb typically collects a flat fee of 3% depending on the country you’re in.9 Booking.com’s fee varies by country and property type10 but is understood to be between 10% and 25%.11
Tourel believes that when it comes to property management, the easiest option is to use a rental property manager to handle online holiday home marketing, bookings, checks for damage, cleaning and maintenance.
“Property managers typically charge between 15% to 20% for their services, plus commission paid to the booking platforms, cleaning and maintenance costs,” he says.
“Many owners opt to manage short-term rentals themselves, which is a much greater commitment but rewarding for those with the time, the skill and a love of hospitality.”
Step 6: Identify what makes a rental popular with tourists
Setting up a holiday home for success takes considerable time and care, advises Luce.
“You need to keep in mind that a holiday house should be functional but also a holiday experience for guests – an escape from their everyday life,” she says.
“We avoid using poor quality high-touch items. Things like wine glasses, tableware and linen all need to be good quality.”
Pools, spas, fire pits, kayaks, outdoor lighting, games and bikes are all great additions to a holiday home and can set a rental property apart from the rest.
“You’ll rank better with these kinds of amenities as they are used as popular search filters,” Luce adds.
“Larger houses with a pool and proximity to a beach will always perform well, especially if they can host a group of 10 or 12.”
If your holiday home is particularly seasonal – for example, a beach house or a ski property – Luce suggests preparing for a reduction in income during the off-season, noting that maintenance is a year-round expense. Even when properties are unoccupied, lawns will still need mowing, smoke alarms need to be checked and the management of any unforeseen acts of nature will need attending to.
Step 7: Explore your insurance options
In 2023, the Insurance Council of Australia informed homeowners that some types of home insurance are better suited for holiday rental properties than others. They also emphasised that the host damage protection offered by rental platforms might not provide coverage for all potential damages.12
When it comes to holiday rental insurance, Youi’s Landlord insurance is designed to cover the kinds of loss or damage that may impact the holiday home even when there are no paying guests staying. These could relate to events such as glass and ceramics breakages, and damage caused by fire, storm and more.13
“If you have landlord insurance with us and there has been an insured event at your property, such as escaping water or a storm, you should get in touch with us as soon as possible,” Mervyn Hartley, Youi’s Head of Product for Home and Small Business.
Find out more about Youi Home insurance for your holiday home and consider starting a quote now for insurance that might suit your needs.
Article written by guest writer Melinda Healy.
1 Source: Australian Bureau of Statistics – Housing Occupancy and Costs, May 2022
2 Source: The Conversation – Think short-stay rentals like Airbnb are out of control? Numbers are down, especially in our biggest cities, March 2024
3 Source: Money – How to decide if a holiday home is a good investment, April 2022
4 Source: NSW Government Fair Trading – Laws for short-term rental accommodation
5 Source: Mornington Peninsula Shire – Short Stay Rental Accommodation Local Law
6 Source: Vic Government, Tourism and Events – Starting an accommodation business, August 2023
7 Source: Australian Taxation Office – Holiday homes, June 2024
8 Source: Stayz – Holiday Homes of the Year 2024
9 Source: Airbnb – How much does Airbnb charge hosts?, September 2024
10 Source: Booking.com – Understanding our commission, November 2024
11 Source: SiteMinder – Booking.com fees: Complete guide for hosts
12 Source: Insurance Council of Australia – Short-term rental insurance: essential for holiday homeowners, November 2023
13 Exclusions, limits and additional fees may apply. See the Home & Contents PDS for full details.
